With the holidays fast approaching, our thoughts turn to “end of the year” business activities – particularly the financial reports that are due for the upcoming tax season. 

A little panic sets in wondering if we kept every receipt, tracked all our expenses in QuickBooks, and if we took advantage of the many deductions available to us as business owners.

 Here are 3 simple tips for lowering your taxes during the holidays:

1. Turn your road trip into a tax deduction: Schedule to meet with a client or a vendor on your way to the in-laws, and the mileage to the meeting (and back) is tax deductible! (Doesn’t the client deserve a nice holiday gift anyway?) Now you can truly laugh at your father-in-law’s corny jokes because you know the trip was partly paid for by the IRS!

2. Get the gift of tax deductions: Did you know that home office furniture is tax deductible even if you don’t take the home office deduction? So take advantage of the holiday sales and buy that new desk you’ve been eyeing for an extra 20-35% off! (Depending on your tax rate.) Talk about hitting the jack pot!

3. Getting your records in order will save you money: To do this we found a product created by one of our favorite tax experts, Sandy Botkin (a former IRS trainer, CPA and Tax Attorney), that we love because it has solved our Holiday Financial Panic and made taking tax deductions so easy. Taxbot is an amazing digital tax tracker that automatically tracks business mileage with a GPS Mileage Tracker, records expenses and intuitively makes them IRS compliant. It even has a built-in receipt scanner! It even syncs to a secure web portal that offers detailed integrated reports and expert tax training and tips. They really thought of everything!

This holiday season you, too, can take the stress out of tax planning with this ingenious app! 

Get your free 2-week Taxbot trial right here!

Want even more tips and tricks to get the most tax deductions possible as a business owner? Join us for a live webinar from Sandy Botkin on December 15 from 10-11 a.m. PST.

Click here to reserve your spot for “5 Strategies To Maximize Your Tax Deductions And Stay Out Of Trouble With The IRS!”

*Thank you to Sandy Botkin and the team at The Tax Reduction Institute for providing these helpful tips. 

One of the best parts of my job is that I get to cruise through the current events and news affecting our economy. Admittedly, although sometimes our current economic news is depressing, I look forward to seeing what small business owners have to say about the situation and how we can improve things heading into the future.

That being said, as I was perusing the Small Business News today, I came across a blog written by Shashi Bellamkonda, director of social media and PR at Network Solutions, proposing a tax break for frequent restaurant-goers that would both stimulate the economy and create jobs.

Shashi proposes a “tax-free lunch plan” for taxpayers spending more than $1,000 at restaurants in 2011. The amount could be completely written off by the taxpayer, so long as they provide receipts documenting the deductions for their tax return.

He backs up the proposal with facts. According to his research, the national restaurant industry has a total economic impact of more than $1.7 trillion. Every dollar spent in restaurants equates to $2.05 spent in the general economy. Given the data, this proposal for “tax-free lunch” may hold some weight in improving the plight of many restaurant owners’ declining sales over the last few years.

While President Obama and Congress have passed bills like the 2009 “Cash for Clunkers” program, which reportedly saved 42,000 jobs, industries like the restaurant and hospitality arena have continued to see fewer and fewer people frequenting their favorite eateries.

At Laughlin, we have several restaurant owner clients. This proposal for writing off restaurant expenses in 2011 got my wheels turning as to what those clients would have to say about this idea. Online coupon programs like Groupon and Living Social have taken off like wildfire, and often offer deals for dining out. Why wouldn’t this “tax-free lunch plan” work the same way?

With our debt ceiling out the roof and jobs steadily declining, it is time that we come up with solutions to stimulate this economy, create revenue, and offer incentives to the American taxpayer. Our small business owners are the backbone of this economy, and without small family-owned restaurants, we’ll only be left with the big name corporate restaurants and fast food chains. Is that what we want for our America? Do we still have a sense of what the American entrepreneur looks like anymore?

• What are your thoughts on the “tax-free lunch plan” proposed by this blogger?
• Will this help or hurt our economy?
• What viable changes need to be made in order to support American business owners today?

Drop me a line at sjohn@laughlinusa.com and let me know what you think about the “tax-free lunch plan.”

Read Shashi’s full proposal here.

As we’ve watched the destruction of Hurricane Irene in her reign of terror throughout the Northeast, our thoughts and prayers go out to the many of you that have suffered major losses during the last week. Though the damage from this hurricane is irreversible, there is some solace in knowing that there is relief around the corner. The IRS recently announced they will be distributing disaster assistance and emergency relief to taxpayers affected by major natural disasters like Hurricane Irene.

According to the IRS.gov website, special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area. Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes. Both individuals and businesses in a federally declared disaster area can get a faster refund by claiming losses related to the disaster on the tax return for the previous year, usually by filing an amended return.

If you have been impacted by Hurricane Irene, and own a small business, contact the IRS for further information on claiming the losses related to the disaster. Find out more by going to http://www.irs.gov/localcontacts/index.html to locate your local IRS office.

People often work beyond the “normal” retirement age. Here’s how extending your work life can affect your taxes and retirement benefits.

“Normal” retirement age is not a fixed number. For social security purposes, the “full” retirement age threshold ranges from 65 to 67, depending on your birth date. However, you can elect to start receiving lower payments as early as age 62, or you can maximize your benefits by forgoing them until you’re 70. Once you reach age 70, there’s no incentive to postpone your benefits further, since you’ll already have reached your maximum.

* Earnings limit. If you’re working, you probably should forgo the early payment option. Benefits received before full retirement age will be reduced by $1 for every $2 earned over an annual limit (currently $14,160). However, you will receive a compensating increase when you do reach full retirement age, and your payments will not be reduced thereafter no matter how much you earn.

* Taxable benefits. Whether or not you draw benefits, you’ll continue to pay social security and Medicare taxes on any income you earn from wages or self-employment. Up to 85% of your benefits may become subject to income tax, depending on the amount of your other income.

* Medicare. Medicare eligibility begins the year you reach age 65. The program encompasses four types of coverage: hospital insurance, general medical insurance, Medicare Advantage, and prescription drug coverage.

Working beyond retirement age can require several complex decisions. Call us for help with planning the outcome that’s best for you.

You can contact me at 1-800-648-0966 or rrees@laughlinusa.com.

If wedding bells are in your future, your tax situation will be changing also. For starters, your tax filing status will change. You will have the choice of filing a joint return with your spouse or filing a separate return as a married person.

Filing a joint return usually gives you the bigger tax savings. Both spouses’ income and deductions for the entire year will be combined onto one return. Any deductions that are subject to limitations will be determined based on the combined income of both spouses.

In some cases, filing a separate return may save you taxes. A spouse who has high medical expenses or miscellaneous itemized deductions and low income, for example, might be better off filing a separate return.

However, you may not claim certain credits and deductions if you file separate returns.  Generally, only if you file a joint return can you claim the child and dependent care credit, the earned income credit or education credits. Filing separate returns could affect the taxability of your social security benefits and the deductibility of rental losses.

The tax law has been changed to eliminate some of the additional tax that married couples once paid (called the “marriage penalty”). However, once you marry, you should review your federal income tax withholding at work. Fill out a new Form W-4 and indicate that you are married.

Several other limitations may come into play once you get married. For example, your IRA contribution may not be deductible if your spouse is covered by a retirement plan at work and your income exceeds certain limits.

Newlyweds can be faced with a surprise tax bill on April 15 unless they do advance planning. For details or planning guidance, give us a call. You can reach me at 1-800-648-0966 or shoot me an email at rrees@laughlinusa.com.